Refer to Lotta’s Fourth Street Floral data in E6-51B. Use the high-low method to determine the company’s cost equation for van operating costs. Use your results to predict van operating costs at a volume of 15,500 miles.

Data From E6-51B:-

Tamika Lotta, owner of Fourth Street Floral, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Lotta wants to set the delivery fee based on the distance driven to deliver the flowers. Lotta wants to separate the fixed and variable portions of the van’s operating costs to get a better idea of how delivery distance affects these costs. Here are the data from the past seven months:

Requirements:

1. Prepare a scatterplot of Fourth Street Floral’s volume (miles driven) and van operating costs.
2. Do the data appear to contain any outliers? Explain.
3. How strong of a relationship is there between miles driven and van operating expenses?

Transcribed Image Text:

Month January. February March. Miles Driven Van Operating Costs 15,800 $5,460 17,300 $5,680 14,600 $4,940 April. 16,000 $5,310 May..... 17,100 $5,830 June. 15,400 $5,420 July 14,100 $4,880